Santander Bank, easily makes the top twenty largest banks in the world list (usually between 16th-20th depending on the list you’re looking at), with over a trillion dollars in assets, took a loss in court yesterday in what can be described as the Crypto upset of the year.
Santander Bank has been denied in their appeal that was filed with the Court of Justice in San Palo yesterday. The appeal was in reaction to an earlier court ruling in favor of Mecado Bitcoin, a Brazilian based Cryptocurrency Exchange.
Mercado’s business accounts were arbitrarily frozen by Santander, essentially crippling their business, with no specific explanation provided by Santander except for… they were in Cryptocurrencies.
While there was no formal protocol for the actions taken, Santander cited their reasoning for freezing assets totaling just over one million in Brazilian Reals (about $350,000) was based on concerns over the origin of the funds deposited by Mecado because of their “crypto exchange activities”.
The action taken by Santander resulted in a Mecado filing a lawsuit against the global powerhouse in the courts of San Palo. In this inspiring David and Goliath-like story, the courts ultimately ruled in favor of the plaintiff. Ordering Santander to release the funds at once as well as pay a fine equivalent to 1% interest a month for the duration of time the funds were held, this accumulated to just over 200.000 reals (About $50,000).
The rejection of Santander’s appeal marks this as quite a solid victory Mecado. This, however, is by no means an isolated event; in fact, Santander is only one of many major banks throughout the world that routinely take actions similar to this with any crypto related businesses across the globe.
Banks have no formal rules or guideline on the books for how to manage Cryptocurrency businesses as of yet, in fact, most national regulators and governments have yet to put out any formalized regulations containing policies, procedures and minimum requirements for businesses in this field.
As a result banks don’t think twice when shutting down bank accounts of active businesses with no warning whatsoever. Imagine your business suddenly losing it’s banking abilities, with no explanation, no warning, and no access to your funds. Even if you managed to somehow remain solvent, there is now a stigma hanging over your business?
What did you do to deserve this??
Come on! Bank don’t just close million dollar accounts for no reason!
They will to a Crypto Account! Which makes the victory of Mecado all the better, sure the $50,000 in fines means absolutely nothing to an institution the size of Santander Bank, but what was important here was that there was a consequence to their action. An objective court looked at their efforts and deemed in favor of the Crypto Exchange, and the fact that the appeal filed from their undoubtedly overpriced legal team was rejected sends the message that what they did hear was clearly wrong.
This could act as a potential eye opening experiance for banks that have previously been anti crypto, these banks aren’t shutting accounts down and freezing assets because they hate money generated from blockchain based businesses, they’re covering themselves, from potential back dated bylaws coming from trigger happy regulators eager to issue fines that dwarf this $50,000-ish. However perhaps this verdict will serve as a reminder that you can’t treat an entire client segment as criminals for no reason other than your scared not to.
There are many companies that are currently on the losing end of this same battle, having their business uprooted under presumption that the utilization of Cryptocurrency in their business must be linked to a criminal enterprise. When in actuality many of these businesses are working on the forefront of newly developed technology and are taking all of the entrepreneurial risks that come with it, they shouldn’t also have to deal with being sabotaged by their banks that they’ve chose to give their business to as well.
There’s a long way to go before outcomes like these become standard, even single small victories are a step in the right direction in the uphill battle of legitimizing a new industry,but probably not… I don’t care, a wins a win.